Types of Contracts in Marine Insurance

Many business owners consider that a marine insurance contract is a very complicated proposition and is not easy to comprehend. But, they must remember that having a marine insurance contract is essential to ensure they have a financial cushion in case there is a mishap or an unexpected event.

A marine insurance contract is a legal agreement between the insured and the insurer under which the insurer agrees (as per the terms of the agreement) to pay the insured in case of losses or damages to the cargo during a marine journey. The contract also includes any incidents that might occur in other transportation modes.

Any transportation of goods by roadways and airways is also covered under the essentials of the marine insurance contract. Remember, the classification of the contract of insurance and the clauses of a marine insurance policy are covered under the Indian Marine Insurance Act of 1963.

Purchasing a marine insurance contract is crucial for businesses dealing with international goods transit via the sea route. This is because marine accidents are very widespread and can cause major dents in a company’s finances. Thus, getting a customised marine insurance policy that covers all the standard essentials of a marine insurance contract and more is a complete no-brainer.

Here are some of the top features of a marine insurance contract that you must know and understand:

• Proposal and acceptance

• Payment of the required premium

• Insurable interests

• Contract of indemnity

• Utmost good faith

• Contribution

• Subrogation

• Marine insurance claims

Here are the four different types of marine insurance contracts:

Cargo Insurance

This type of marine insurance also known as cargo insurance covers the goods and cargo that are loaded on the ship while being transported. It also provides coverage against losses and damages to cargo and goods that are being transported via railways, roadways, seaways, or airways. This is a classification of the contract of insurance.

Hull insurance

Under this insurance, the equipment, vessel, and vehicle are covered. The hull in the insurance plan is a reference to the vessel’s body. The main classification of ocean-going vessels is ocean steamers, sailing vessels, builders, etc.

The hull insurance provides coverage against losses and damages to the items loaded on the vessel and the body of the vessel. The coverage is provided for the items and vessel body that are termed as the vessel owner’s responsibility and come under their purview.

Liability insurance

Marine liability insurance covers losses and damages that incur due to collision or crash of the ship carrying the goods.

Freight insurance

This type of marine insurance contract provides coverage to a carrier, also known as the freight forwarder. The carrier has the legal responsibility for the goods being transported. Under freight insurance, the value of the goods is normally decided based on their weight, if a claim arises.

If you are in the business of transporting cargo or goods, marine insurance ensures that your goods are safe while they are in transit. Many shipments are not allowed to ferry without a valid marine insurance contract.

Here are some top advantages of a marine insurance policy contract:

• It provides a financial backup for the business owner in case there is an unrecoverable loss or mishap.

• It offers business owners coverage against a list of mishaps.

• There are various plans offered as per the needs of the consumers.

• It is helpful in risk management and risk mitigation.

Marine shipping includes planning, execution, dealings, and installation of various tools to mitigate the risks during transit. Having a marine insurance contract ensures that the policyholder has an adequate financial backup in case there is a loss or damage to any property, such as goods or the vessel.

Tata AIG offers marine insurance in India with features including cargo protection against loss, theft, or damage, compliance with legal requirements, and more.